Legal framework for equity crowdfunding

The legal framework for equity crowdfunding was introduced in Italy in 2012, with the Decree-Law 179/2012 (the “Startup Act”).

The regulation initially focused on innovative start-ups, but then, with subsequent amendments, it was extended to SMEs, even if not incorporated under the special sections of the Italian Business Register for innovative start-ups and innovative SMEs.

For the definition of innovative start-up and SME read: Innovative start-ups and SMEs: definition for the Italian law

The Consob (the Italian Companies and Exchange Commission) has the power and responsibility to determine the operating measures for implementing the regulation, which are mainly the following:

  • the fundraising activity must be carried out through “online portals”, managed by investment firms, banks or entities authorised by Consob. These entities must comply with certain requirements of integrity and professionalism;
  • issuers can be innovative start-ups and SMEs. UCITs and companies that invest mainly in innovative start-ups and innovative SMEs can also raise equity capital through crowdfunding platforms;
  • the target amount for each offer must not exceed the maximum threshold of € 8 million;
  • at least 5% of each campaign must be subscribed by “professional” investors, such as bank foundations, start-up incubators, “serial” investors in crowdfunding campaigns (e.g. business angels) or people with experience as managing directors in innovative start-ups or SMEs. The threshold is reduced to 3% for campaigns in relation to SMEs with certified financial statements or consolidated financial statements for the previous two years;
  • in their by-laws or articles of incorporation, issuers are obliged to include clauses that guarantee the investors’ way-out in case of changes in the controlling interest, such as tag-along or termination clauses.

Recently, the 2019 Budget Law introduced the possibility for authorised equity crowdfunding platforms to have a section dedicated to the private placement of bonds issued by SMEs. Bonds can be placed to professional investors and to specific categories of investors that will be identified by the Consob. The operating measures for implementing this new activity still need to be defined by the Consob.

Moreover, with the 2019 Budget Law, equity crowdfunding platforms will be able to create a marketplace that allows investors to sell and buy their equity stakes in the funded companies. Consultations for determining the guidelines for a secondary crowdfunding market are still underway.

Lastly, a new regulation on crypto-assets and crypto-currencies ICOs and exchanges will be introduced soon. The authorised equity crowdfunding platforms are expected to play an important role in the ICO phase.


SOURCES:

You can find more info on the Italian regulation on the equity crowdfunding (articles 50-quinquies and 100-ter) at this LINK.

The portals managers for equity crowdfunding at the following link: http://www.consob.it/c/portal/layout?p_l_id=722829&p_v_l_s_g_id=0

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